Strategy Quiz 2

A company’s strategy evolves over time as a consequence of

The need to keep strategy in step with changing market conditions and changing customer needs and expectations.

The need to abandon some strategy features that are no longer working well.

The need to respond to the newly initiated actions and competitive moves of rival firms

All of these.

A company’s business model

Sets forth management’s game plan for maximizing profits for shareholders.

Details exactly how management’s strategy will result in the achievement of the company’s strategic intent.

Explains how it will achieve high profit margins while at the same time charging relatively low prices to costumers.

Sets forth the key components of the enterprise’s business approach, indicated how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner.

The four elements of a business model include:

The value proposition

The value creation

Value capture

All of the above (and value delivery)

Management’s story line for how and why the company’s business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment

describe what is meant by a corporate strategy

Best describes what is meant by a company’s business model

accounts for why the company’s financial objectives are at the stated level

Is what is meant by the term strategic fit

Which is true of strategy

business strategy has similarities with military strategy

Military principles cannot be completely applied in business

Militaries fight over territories, waters, and air spaces, firms compete in markets

All of the above

A company achieves sustainable competitive advantage when

An attractive number of buyers have a lasting preference for its products or services as compared to the offering of competitors

It is able to maximize shareholder wealth

It is consistently able to achieve both strategic and financial objectives

Its strategy and its business model are focused on cost-efficiency

By exploiting their core competence to meet or exceed the standards for global competition, firms create _____ for costumers.

Low prices

Valuation

Valuables

Value

Factors that cause the rivalry among competing sellers to be weak include

Lower buyer switching costs and rival sellers that are relatively equal in size and capability

Rapid growth in buyer demand and high buyer switching costs

low barrier to entry and weakly differentiated products among rival seller

Slow growth in buyer demand and strongly differentiated products

Properly managing the value chain activities in comparison to the rivals

Is one of the most dependable ways a company can build a competitive advantage over rivals

allows a company to avoid the impact of the five competitive forces

is one of the best ways for a company to avoid being impacted by the industry’s driving forces

Helps neutralize external threats to a company’s future business prospects

In mapping strategic groups

it is important for the variables used as axes to be highly correlated

The best variables to use as axes for the map are those that differentiate how rivals have positioned themselves in the marketplace

One strategic variables and one financial variable should be used as axes for the map

All of these

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and

The rapid development of the Internet’s capabilities

Extensive use of outsourcing within the borders of the EU

The declining number of inventions and patents developed by Norwegian citizens

the simultaneous erosion of the work ethic and the education system

In a single-business company, the strategy making hierarchy consists of

Functional strategy  business strategy

Competitive strategy  functional strategies

competitive strategy  corporate strategy

Divisional strategies  functional strategies

The industrial organization (i/O) model argues that

The key factor in success is choosing the correct industry in which to compete

the firm’s internal resources and capabilities represents the foundation for development of a value creating strategy

the key to earning above-average returns is strategic flexibility

The internal structure of the organization must be a match

Competitor analysis focuses on

Firms with which the company competes directly

Firms that produce products that are substitutes

all firms in the indstry

Companies that might enter the industry

In a diversified firm, corporate level strategy is concerned with

operating each individual business under the corporate umbrella

Determining how each functional department of the firm will operate

Determining in which business to compete and how resources will be allocated between businesses

coordinating the vision and mission of each subsidiary

A competitive strategy/business-level strategy describes

The businesses in which the company intends to compete

all policies and procedures used in functional departments

The firm’s actions to exploit its competitive advantage over rivals

a firm’s resources, intent and mission

A company that pursue and achieves strategic objectives

Is likely to weaken the achievement of its short term and long term financial objectives

believes that the company’s financial performance is not as important as it really is

Is generally not strongly focused on its true mission of making a profit

Is frequently in a better position to improve its future financial performance because of the increased competitiveness that flows from the achievement of strategic objectives

A strategic alliance

is a collaborative arrangement where companies join forces to defeat mutual competitive rivals

Involves two or more companies joining forces to pursue vertical integration

Is a formal agreement between two or more companies in which there is a strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence

is a partnership between two companies is typically intended to eliminate the need to engage outsourcing

A balanced scorecard is a conceptually strong approach for judging a company’s overall performance because

It assists managers in putting roughly equal emphasis on short term and long term performance targets

It entails putting equal emphasis on good strategy implementation and good business model coherence

it pushes managers to avoid setting objectives that reflect the results of past decisions and organizational activities

Financial performance measures are lagging indicators that reflect the results of past decisions and organizational activities whereas strategic performance measures are leading indicators of a company’s future financial performance

The chief difference between a broad differentiation strategy and a focused differentiation is

The size of the buyer group that a company is trying to appeal to

The degree of bargaining power that buyers have

whether the product is strongly differentiated or weakly differentiated from rivals

The type of value chain being used to achieve a differentiation-based competitive advantage

The vision of the company

should encourage employees

Serves as a guiding tool for stakeholders

Determines the future focus of corporate policy

All of the above

The advantages of using a franchising strategy to pursue opportunities in foreign markets include

Having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train and support foreign franchisees

Being particularly well suited to the global expansion efforts of companies with multidomestic strategies

Allowing a company to achieve scale economies

Being well suited to companies who employ cross-border transfer strategies.

The aim of a blue ocean strategy

Is to develop business model innovation based on intangible resources

Is to beat competitors by combining cost leadership and differentiation strategy

Is to outperform the strongest competitor

Is to make competition irrelevant by creating uncontested market space

Which of the following is NOT a primary focus of a company’s strategy?

How each functional piece of the business will be operated

How to achieve above-average gains in the company’s stock price and thereby meet of beat shareholder expectations

How to compete successfully

How to grow the business

The resource-based view assumes all of the following EXEPT

Resources. Form the basis of competitive advantage

Resources are heterogenous within a particular industry

Firms aquire different resources over time

Resources are highly mobile across firms

Its overriding purpose, in line with the values or expectations of stakeholders

its business plan.

its desired future state

Its overriding purpose, regardless of the values or expectations of stakeholders.

The theory of comparative advantage postulates

That a country should export those goods and services it is relatively best able to produce.

That international trade cannot take place between countries with high tariff barriers.

that international trade must be compared to the domestic advantages a firm has.

That a country should only engage in international trade if it has an absolute cost advantage.

Competitive, as distinct from corporate strategy, is chiefly concerned with

Deciding what new businesses to enter, which existing businesses to get off, and which existing business to remain in

Forging actions and approaches to compete successfully in a particular line of business

coordinating the competitive approaches of a company’s different business units

what business model to employ in each of the company’s different businesses

Which of the following is typically the strategic impetus for forward vertical integration?

Being able to control the wholesale/retail portion of the industry value chain

Fewer disruptions in the delivery of the company’s products to end-users

gaining better access to end users and better market visibility

Broadening the company’s product line

The difference between a merger and an acquisition is that

a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company buy buying all of the shares of common stock

A merger is a pooling of equals whereas an acquisition involves one company, the acquirer, purchasing and absorbing the operations of another company, the acquired

in a merger the companies retain their original names whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company

A merger is a combination of three or more companies whereas an acquisition is pooling of interests of just two companies

The range of products and services segments that the firm serves within its market is known as the firm’s

Horizontal scope

vertical integration

Vertical scope

Product outsourcing

The business case for why companies should act in a socially responsible manner includes such reasons as

it generates internal benefits (as concerns employee recruiting, employee moral etc.)

it reduces the risk of reputation-damaging incidents

it is in the best interest of shareholders

All of these

A blue ocean strategy

Is an offensive attack used by a market leader to steal costumers away from unsuspecting smaller rivals

involves a preemptive strike to secure an advantageous position in a fast growing market segment

Works best when a company is the industry’s low cost leader

Involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand

A key approach for a company to grow sales and profits in several country markets is to

Transfer its valuable competencies and resources strengths among these markets to aid in the development of broader competencies and capabilities

employ a multidomestic strategy rather than a global strategy

Locate technical after-sales services close to buyers

Minimize transportation costs between these markets

Diversification merits strong consideration whenever a single-business company

Has integrated backward and forward as far as it can

Is faced with diminishing market opportunities and stagnating sales in its principal business

Has achieved industry leadership in its main line for business

Encounters declining profits in its mainstay business

Acquisition premium is the amount by which the price offered for an existing business exceeds

The pre-acquisition market value of the target company

The fair market value of similar companies in the same geographic locale

the comparable value of similar companies within the same market

the market value of the target company plus the cost for due diligence

Strategic alliances

Are the cheapest means of developing new technologies and getting new products to market quickly

Are collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes

are a proven means of reducing the costs of performing value chain activities

Are best used to insulate a company from the impact of the five competitive forces

The balanced scorecard

Integrates financial targets and market segmentation

Facilitates the formulation of corporate strategies

Facilitates the formulation of competitive strategies

None of the above

A company’s value chain identifies

The steps it goes through to convert its net income into value for shareholders

The primary activities it performs in creating value for its customers and related support activities

the series of steps it takes to get a product from the raw materials stage into the hands of end-users

the activities it performs in transforming its competencies into distinctive capabilities

The strategy process

Is always rational

must be supported by advanced information technology

Results in decreasing per units costs

Starts with the formulation of a vision and mission

Which one of the following is not one of the major drivers of unethical managerial behavior?

intense competitive pressures

overzealous pursuit of personal gain, wealth, and other self-interests

A company culture that puts the profitability and good business performance ahead of ethical behavior

Heavy pressure on company managers to meet or beat earnings

A joint venture is an attractive way for a company to enter a new industry when

A firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gap

it needs access to economies of scope and good financial fits in order to be costcompetitive

It is uneconomical for the firm to achieve economies of scope in its own initiative

The firm has no prior experiences with diversification

A firm’s organizational structure is comprised of

Resource strengths and competitive capabilities that allow it to incorporate attributes at lower costs than rivals whose products have similar attributes

The formal and informal arrangements of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered

Excellent marketing and sales skills to convince buyers to pay a premium price for the attributes/features incorporated in its product

Sustainable distinctive competences to ensure cost reduction and competitiveness

The difference between the concept of a company mission statement and the concept of a strategic vision is that

A mission statement deals with “where we are headed?” whereas a strategic vision provides the critical answer to “how will we get there?”

The mission is to make a profit, whereas a strategic vision concerns what business model to employ in striving to make a profit

A mission statement typically concerns a company’s present business scope (“who we are, why do we exist”) whereas the principal concern of a strategic vision is the company’s long term direction

a mission statement deals with the “where we are headed” whereas a strategic vision provides the critical answer to “how will we get there?”

From a strategy-implementing perspective, budget allocations should

Primarily be based on the number of new strategic initiatives being implemented in each department

Be based on the number of people employed in each of the divisions

Be strategy-driven and based primarily on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively

be linked to the costs of performing value chain activities as determined by benchmarking against best-in-industry competitors

The two-tier system of corporate governance is characterized by

The tension between two main stakeholder groups: management and employees

A collaborative way of resolving conflicts in the management board

A clear institutional separation between a supervisor and a management body

A system where the CEO has simultaneously two positions/functions; CEO and chairman of the board

Which of the following is false?

Unique bundles of resources are the ultimate source of wealth creation

the critical resource for firms is the ability to use the rapidly evolving internet

a global labor market for employees now exists

Any competitive advantage will eventually disappear

The heart and soul of a company’s strategy-making effort

is figuring out how to maximize the profits and shareholder value

concerns how to improve the efficiency of its business model

deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner that keeps the company’s prices as low as possible

Involves coming up with moves and actions that produce a durable competitive advantage over rivals

An emergent strategy

Must be avoided

Develops out of social and political processes

Leads to a more successful strategy implementation

Is part of the resource-based model

Intensifies rivalry within an industry results in

increased hiring costs across the industry

Increased total revenues across the industry

Decreased average profitability across the industry

Increased entries into the industry

A company pursuing a related diversification strategy would likely address the issue of what additional industries/businesses do to diversify into by

Locating businesses with well-known brand names and large market shares

Identifying industries with the least competitive intensity

Identifying an attractive industry whose value chain has good strategic fit with one or more of the firm’s present businesses

identifying businesses with the potential to diversify the number and types of different activities in the firm’s value chain make-up

The advantages of using an export strategy to build a customer base in foreign markets include

being able to minimize shipping costs, avoid tariffs, and curb the effects of fluctuating exchange rates

Minimizing risks and capital requirements

Being cheaper and more cost efficient than licensing and franchising

Being cheaper and more cost efficient than multi-country strategy

All of the following are assumptions of the resource based model except

each firm is a unique collection of resources and capabilities

The industry’s structural characteristics have little impact on a firm’s performance over time

Capabilities are highly mobile across firms

differences in resources and capabilities are the basis of competitive advantage

Apple has reemerged as a significant player in computer industry. This regeneration has been attributed mainly to what capability?

cost control

Economies of scale

Innovation

monopoly power

The environmental segments that comprise the macro environment typically will NOT include

Demographic factors

Sociocultural factors

Substitute products or services

technological factors

Which of the following is NOT an entry barrier to an industry?

expected competitor retaliation

economies of scale

Customer product loyalty

Bargaining power of suppliers

Functional-area strategies

Concern the actions, approaches, and practices to be employed in managing particular functions or business processes or key activities within a business

specify what actions a company should take to resolve specific strategic issues and problems

Are normally crafted by operating-level managers

are concerned with how to unify the firm’s several different operating strategies into a cohesive whole

A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents “the best practice” when both costs and effectiveness are taken into account is

Competitive strength analysis

Activity based costing

SWOT analysis

Benchmarking

In the dualistic system of corporate governance

Members of the board play two roles at the same time: strategic steering of the company and control

Shareholders and representatives of employees elect the members of the supervisory board

the management board can only decide on strategy after prior approval of the supervisory board

There is a duality of interest: maximizing profits versus corporate social responsibility

CEO duality refers to

The CEO being responsible to the shareholders and the employees

The CEO being elevated by the shareholders and the members of the supervisory board

The CEO being the highest executive manager in the firm and at the same time being the chairman of the board

a retires CEO becoming the chairman of the board

The five forces model suggests that an industry’s profitability is a function of all the following factors expect

Buyers

Competitive rivalry

Suppliers

the economic environment

In the value chain the operations in a passenger airline service would be:

the manufacture of the aircraft

Getting passengers and baggage from a to b

The design of the price structure and yield plan

lost luggage service

Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five forces model?

By increasing firm margins, it avoids the need for a low cost position

It reduces buyer power because buyers lack comparable alternatives

Supplier power is increased, because suppliers will be able to charge higher prices for their inputs

Firms will enjoy high costumer loyalty

Primary value chain activities that involve the effective layout of receiving dock operation (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?

Differentiation

Differentiation focus

Overall cost leadership (combination of competitive strategy and value chain model)

Stuck-in-the-middle

Which of the following statements about the introduction stage of the market life cycle is true?

It produces relatively large, positive cash flows

Strong brand recognition seldom serves as an important switching cost

Market share gains by pioneers are usually easily sustained for many years

Products or services offered by pioneers may be perceived as differentiated because they are new

The rivalry among competing sellers tends to be less intense when

Industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales

Buyer demand is weak and many sellers have excess capacity and/or inventory

Industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance

Rivals have diverse strategies and objectives and are located in different countries

Which of the following statements about ethics is NOT true?

Ethics may be defined as a system of right and wrong

Ethics assists individuals in deciding when an act is moral or immoral

Ethics is not concerned with whether or not an act is socially desirable

Business ethics is the application of ethical standards to commercial enterprises

According to Henry Mintzberg, the realized strategies of a firm:

Combination of deliberate and emergent strategies

Combination of deliberate and differentiation strategies

Must be based on the strategic plan of the company

Must be kept confidential for competitive reasons

A strategic vision provides many benefits. Which of the following is not one of those benefits:

A clear future direction

A framework for their ORG mission and goals

Enhanced employee communication commitment

Diminished employee participation

Which of the following is NOT typical strategic objective or benefit that drivers mergers and acquisitions?

To gain quick access to new technologies or other resources and capabilities

To create a more cost-efficient operation out of the combined companies

To expand company’s geographic coverage

To facilitate a company´s shift from a broad differentiation strategy to a focused differentiation strategy

Dynamic capabilities include all of the following except….

Learning and innovating

Becoming more efficient in operational processes

The ability of an organization to challenge the conventional industry in its industry and market

Continuously adopting new ways of serving the evolving needs of the market

The network of relationship that individuals have throughout the organization is known as….

Human capital

Intellectual capital

Social capital

Tacit capital

Which of the following is not one of the five generic types of competitive strategy

A low-cost provider strategy

A broad differentiation strategy

A focused low-cost provider strategy

A market share dominator strategy

A firm can achieve differentiation through all of the following means except…

Improving brand names

Better consumer service

Adding additional product features

Offering lower prices to frequent costumers

A company´s business model

Concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets

Is management's storyline for how it will generate revenues ample to cover costs and produce a profit.

Concerns what combination of moves in the marketplace it plans to make to outcompete rivals.

Deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible.

A company´s “macro environment” refers to

The industry and competitive arena in which the company operates

General economic conditions plus the factors driving change in the markets where a company operates.

All the relevant forces and factors outside a company's boundaries— e.g. General economic conditions, population demographics, etc

The competitive market environment that exists between a company and its competitors.

What two factors inhibit the ability of rivals to imitate a firm´s most valuable resources and capabilities?

Causal ambiguity and high competitive dynamics

Social capital and casual uncertainty

Cost leadership and causal ambiguity

Complexity and causal ambiguity

A related vertical diversification of a car manufacturer like Renault would typically include

The development of substitute products.

A backward integration into input activities.

The development of products/services beyond the current capabilities.

Selling the cars in emergent international markets, for example China.

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